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Week February 06- February 10, 2017

World class health infra at competitive prices to fuel Indian medical tourism boom


Medical tourism - Unmet healthcare needs + international tourism
Medical tourism, which is also referred as medical travel, health tourism or wellness tourism, is a term used to describe the growing practice of travelling across countries predominantly to seek voluntary healthcare. Services typically sought by travellers include elective surgeries/procedures as well as complex surgeries, preventive alternate wellness therapies, etc. In the past, medical tourism usually referred to those who travelled from less-developed countries to major medical centres in highly developed countries for treatment unavailable at home. However, in recent years, the trend has also been from developed countries to third-world countries for lower priced medical treatments. The cost-consciousness factor and availability of accredited facilities have led to emergence of several global medical tourism corridors – 1) Asia/South Asia corridor- Singapore, Thailand, Malaysia India, 2) Central Asia corridor- Gulf Cooperation Council (GCC) and 2) Latin America corridor- Mexico and Costa Rica. As per Grand Thornton- CII report, the global medical tourism market was estimated to be US$15-20 billion in 2015. In India, the theme medical tourism has been discussed only in the last decade. With the rapid development in the healthcare space, the country is well poised to capitalise on the growing opportunities with inherent cost arbitrage and state-of-the art specialty treatment offerings.
 

India advantage- Important aspects of Indian healthcare fundamental for medical tourism evolution-

Over the years, India has grown to become a top notch destination for medical value travel because it scores high over a range of factors that determines the overall quality of care. From quality of therapy, range of procedural and treatment options, infrastructure and skilled manpower to perform any medical procedure with zero waiting time and lastly availability of generic drugs, the list of benefits of travelling for medical treatment in India are many. This is especially for costly and delicate surgeries like bypass, kidney and liver transplant, hip replacement, dental services, cosmetic surgery and bariatric surgery. Indian hospitals are offering standard services at comparatively low costs.
 

Evolution of private healthcare sector - Ever since the government opened up healthcare to the private sector in the 1980s, the country has seen exponential growth in corporate hospitals. Several family-owned and doctors managed private hospitals, with a portfolio approach emerged between 1980 and 2015. Intense competition and reverse drain of expatriate, highly trained doctors enabled these chains to venture into specialties and super-specialties. These hospitals also received government support in the nature of tax and other breaks. Conducive policies for encouraging FDI, tax benefits, favourable government policies coupled with promising growth prospects have helped the industry fulfil the capital requirements via scores of private equity and venture capital deals.
 
  JCI accredited facilities in some countries                   Number of NABH Hospitals in India (2015)
 

Source: Grand Thornton- CII report

Source: Grand Thornton- CII report

Accredited hospitals with huge capacity and gamut of specialty offerings - Indian hospitals over the years have learned the importance of facility accreditation and accordingly worked towards achieving the benchmark. Globally, the Joint Commission International (JCI) is considered a major benchmark by medical tourists. Currently, India has 30 JCI accredited hospitals. However, the number is still less compared to other countries (UAE 146; China 62; Thailand 53). However, with growing awareness and quest for moving into specialty and super specialty the accreditation number is set to increase. Similarly, most accredited hospitals have huge capacity (bed count 200+) while the average capacity utilisation is still low at ~50%. Similarly, most of these hospitals are tertiary/quaternary care multispecialty or single-super specialty hospitals.
 

Fast track action – negligible waiting period - Quick and immediate attention for surgeries and all interventions is another advantage in India. Getting an appointment for bypass surgery or a planned angioplasty in certain countries takes almost three to six months. It is zero waiting time in India for any procedure, be it heart surgery, kidney care, cancer treatment, knee/hip/joint replacements, dental, cosmetic surgeries, weight loss surgery, etc.
 

Availability of large pool of doctors/nurses - India has the largest pool of doctors and paramedics in South Asia (~9.8 lakh allopathic doctors, ~3.5 lakh dental surgeons, ~ 6 lakh Ayush doctors and ~20 lakh nurses). With a large number of doctors, there is a high level of competency and capability in adoption of newer technologies along with innovation and fresh treatment methods. Many of the doctors have worked at some or other time in the leading medical institutions of the world during their tenure.
 

Use of state-of-the art technologies and procedures - Most recognised hospitals have invested heavily in supportive technology and operative techniques. Recent advancements in robotic surgeries, radiation surgery or radio therapies with cyber knife options, IMRT/IGRT, transplant support systems, advanced neuro and spinal options are all available in India.
 

Legacy of ethnic treatment- Yoga, meditation, Ayurveda, Siddha, Unani and other traditional methods of treatment and rehabilitation are the legacy of India. These are alternate medicine branches, which are slowly getting global acceptance especially for preventative therapies. Very few countries in the world have evolved their ethnic treatments to such a scale.
 

First class services at reasonable prices- Healthcare costs in India are extremely competitive compared to those in developed countries and other Asian countries. Procedures such as hip and knee replacement, face lift, and gastric bypass are far more affordable in India, including the cost of travel and accommodation, compared to the US. Moreover, these cosmetic procedures are not covered by most insurance providers in Western countries. India has many hospitals for open-heart surgery and paediatric heart surgeries, which are equipped with the latest equipment that are on par with these western countries. With healthcare costs soaring in these countries, the relatively low cost of surgery and critical care in India make it an attractive destination for medical tourism. India also attracts medical tourists from other developing nations due to the lack of advanced medical facilities in many of these countries.
 

  Comparative surgeries : huge cost arbitrage vis-à-vis developed countries as well as other Asian peers
 

 

Source: CRISIL Report
 

Hepatitis C treatment- medical tourism not just confined to healthcare but pharma as well...

For years, India has been recognised as a destination to obtain quality care at much lower rates, compared to other countries around the world. Now, in addition to low cost procedures, the highly sought after medication cure for hepatitis C can be obtained in India for a fraction of the cost elsewhere, boosting India’s attractiveness for medical travel. In September 2014, Gilead, the manufacturer of blockbuster hepatitis C drugs Sovaldi and Harvoni, entered into a licensing and technology transfer agreement in which it granted several companies in India the right to manufacture and distribute generic versions Sovaldi and Harvoni. Currently, the generic versions of these, and other treatments for hepatitis C, are now available in India. Additionally, the cost of these generic medications is roughly US$900-1,250 for the recommended eight-four day regimen, compared to US$84,000–94,500 for the brand name drugs in the US. Some NGOs such as Health Flights Solutions, a Florida based company, have developed a programme that sends patients to India and other destinations for the treatment of hepatitis C, avoiding the price tag of what is considered one of the most expensive drugs in the US. They have developed relationships with entities who receive the medications directly from the manufacturers and work with a network of hospitals to provide treatment for patients with hepatitis C. This is the latest form of medical tourism, which basically banks upon the low cost of medicines rather than low cost of healthcare.

Government initiatives- efforts to streamline procedures to avoid unwarranted delays...

Facilitation for medical visa - The government has introduced e-visas for patients seeking prolonged treatment in recognised healthcare centres. Applicants from nearly 160 countries are eligible for e-tourist visas and can send online applications for medical visas with scanned copies of medical prescriptions from a government-accredited hospital of his/ her country. The applicant’s biometric details are taken on arrival. The short-term medical visa is valid for 30 days from the date of arrival, after which the home department of individual states can extend it by up to one year, provided the application is based on a medical certificate backed by documented advice from a hospital in India. The government has also introduced medical visa and medical attendant visa as separate categories of visa to facilitate entry of medical tourists in India. The visa relaxation follows the Tourism Ministry’s efforts to bring India at par with competing nations like Thailand, Malaysia and Singapore, which offer visa on arrival. Previously, patients coming to India for medical treatment had to seek online appointments from Indian missions which used take several weeks or even a month. Besides the long wait, patients were required to be physically present during the embassy interaction. The patients also had to furnish a prior tie-up certificate from the Indian hospital willing to treat him.
 

Constitution of National Medical & Wellness Tourism Board - In order to provide dedicated institutional framework to medical tourism, wellness tourism and yoga, Ayurveda tourism and any other format of Indian system of medicine covered by Ayurveda, Yoga, Unani, Siddha and homeopathy (AYUSH), the government has constituted a National Medical & Wellness and Tourism Board. The Board will work as umbrella organisation that governs and promotes this segment of tourism in an organised manner.
 

Annexure 1-

Global industry dossier- Common factors driving medical tourism-

Affordability - Nearly 80% of current global medical tourists are driven by cost consciousness. Healthcare cost delta is huge between developed countries and developing/underdeveloped countries. Especially, immigrants from developing/underdeveloped countries who have settled down in developed countries such as the US are more likely to travel down to their country of origin or any other preferred destination for voluntary surgeries.
 

Availability - Some complex surgeries and cosmetic procedures are not available at all in a particular country. This type of travel is called “need factor travel”, where a person travels down to a country where such surgeries are undertaken.
 

Wellness and leisure combined with travel - Many global healthcare corridors also have some of the world class tourist destinations. Some patients especially those opting for voluntary procedures/surgeries combine the healthcare requirements with site seeing.
 

Broadly global medical tourism can be classified into four sub-groups-

Source: Various reports, company annual reports

 

 Hospital Accreditation- benchmarks followed by international medical tourists

Accreditation of hospitals is a voluntary process, wherein an authorised agency evaluates and recognises health services according to a set of standards which are revised periodically.
 

Joint Commission International accredited facilities - Joint Commission International (JCI), a US based organisation which accredits medical services around the world. JCI accreditation is considered the gold standard in global health care. The more accredited hospitals a country has, the better it’s positioning in the global medical tourism arena.
 

National Accreditation Board for Hospitals and Healthcare Providers - National Accreditation Board for Hospitals and Healthcare Providers (NABH) is a constituent board of Quality Council of India, set up to establish and operate accreditation programme for healthcare organisations. While JCI is globally recognised, hospitals certified by national boards such as NABH also tend to meet global standards in clinical outcomes and processes. India boasts over 300 such facilities offering immediate care of seekers.
 

Some peculiar medical tourism models prevalent in the world-
 

Government contracts - This involves facilitation of hospitalisation through bilateral agreement among governments. In this case, hospitals in the host country with necessary capability and accreditation are earmarked for hospitalisation from the foreign country with whom the agreement has been entered into. MoUs with governments guarantee fee for hospitals as well as streamlining patient footfalls.
 

Prevailing contractual terms:

  • Governments take responsibility for the payments

  • Discounted package rates agreed (OPD and IPD) with additional facilities (airport pickups, single point of contact, interpretation services, food preferences, room upgrades)

  • Validity – Two-third years or above

Government contract model

 

Corporate tie-ups and associations - According to this model, hospitals directly initiate individual efforts to tie up with corporates (preferably transnationals) in overseas locations. The nature of tie up can evolve over a period of time and usually starts with a general health check-up scheme and primarily intend to route complicated surgical treatments to facilities in the domicile country of the concerned hospitals.
 

Prevailing contractual terms:

  • ~25% of collected fee from patients upfront or in case of specific complicated and urgent surgeries

  • Facilitation fee payment only post collection of dues from patients

  • The government in the host country is kept in the loop for security reasons

Facilitators model


 

Source: Grand Thornton- CII report

Corporate tie-ups and associations - According to this model, hospitals directly initiate individual efforts to tie up with corporates (preferably transnationals) in overseas locations. The nature of tie up can evolve over a period of time and usually starts with a general health check-up scheme and primarily intend to route complicated surgical treatments to facilities in the domicile country of the concerned hospitals.
 

Key limiting factors to India’s position as medical tourist destination-

Infectious diseases - India still has a global image of a country with poor hygiene. Spread of waterborne and airborne diseases are common in India. India’s track record for control of hospital based infections is also relatively poor. Overuse of anti-infectives has lead to the evolution of drug resistant microbes, which may act as a major damper.
 
Crowding from Indians in hospitals – Lifestyle changes, desire for cosmetic surgeries, growing coverage of healthcare policies and better affordability have pushed more Indians to avail specialty and super specialty services in word-class Indian hospitals. Similarly the addition of new hospitals has not been able to keep pace. Although the overall occupancy for Indian hospitals is ~50%, the pace at which Indians opting for specialty and super specialty services is likely squeeze the available beds for foreign tourists.
   

Current success just tip of the iceberg; Huge opportunity ahead…

There is hardly any surgery or procedure in the world, which a typical well established tertiary or quaternary hospital in India cannot perform. Similarly, other alternate forms of preventive or curative treatments such as Ayurveda, Yoga, Siddha, and Yunani are predominantly available only in India. In addition to this, the new emerging trend of availability of cheap licensed medicines for treatment of complex diseases such as Hepatitis C has provided different avenues for the development of medical tourism in India. However, a sizable chunk of the arrivals for medical treatment is still from South Asia due to lack of high-end medical facilities in some countries in the region. Most arrivals are also from war-torn countries of Iraq, Syria or Afghanistan. India is still some distance away from attracting patients from the developed world despite having one of the best cost arbitrage and quality services. Thailand, on the other hand, is attracting ~10 lakh medical tourists annually, most of which are western tourists. One reason for India’s slow progress is the late recognition and fewer accredited hospitals vis-à-vis other countries. Lengthy visa approval procedures also affected the potential healthcare seekers from the developed world. The percentage of medical tourists out of overall foreign tourists is still low at ~5% (2014 data). However, with growing awareness of the potential for medical tourism among private players supported by massive expansion and the government’s initiatives especially to streamline visa formalities, this percentage is likely to increase, going ahead.
 

Medical Tourists arrival trend Region wise break-up of medical tourist arrivals

Source:Crisil Report, Ministry of Tourism

Source:Grand Thornton- CII report

Annexure 2-

Medical Tourism Index (MTI) - high ranking can pave the way for incremental inflow
 

The Medical Tourism Index (MTI) is a recently introduced gauge followed globally by those contemplating travel outside their country of origin for a medical procedure. It was created in conjunction with The International Healthcare Research Centre (IHRC) and office bearers of US based Medical Tourism Association. Key considerations such as safety, environmental factors, healthcare staff and facilities, health insurance, and quality of accreditation necessary to make a well-informed decision are contained in the index. The index is based on surveyed information hence has more credibility for acceptance. India ranks fifth among top 40 global medical tourism destinations.
 

MTI ranking with score for different parameters

Source: Medical Tourism Index

 
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